Question

mcm Summer : 2018-2019 Assignment Question A [RCl: 5 Marks Green Inc. estimates that its total financing needs for the coming year wll be S35 million. The firm's required financing payments on its debt and equity financing during the coming fiscal ycar wi total $10 million. The firm's financial manager estimates that operating cash flows for the coming ycar will total $33.1 million and that the following changes wil occur in the accounts noted Forecast change +$4 million Account Gross fixed assets Change in current assets Change in accounts payable Change in accrued liabilities +$1 million +$1 million +$0.4 million Estimate Green's free cash flow (FCF) for the coming year. How much of the free cash flow wil the firm have available as internal financing in the coming year? How much external financing will Green need during the coming ycar to meet its total forecast financing needs? a. b. source of new C 1

Answer 1

		Operating Cash flow	$33.10	million
		Cash Flow due to Capital expense	($4)	million
		Cash Flow due to change in current assets	($1)	million
		Cash Flow due to change in accounts payable	$1	million
		Cash Flow due to change in accrued liabilities	$0.40	million
		FREE CASH FLOW	$29.50	million
	a	Estimated Free Cash Flow for the coming year	$29.50	million
		Payments for debt and equity financing	$10	million
	b	Amount available for source of new internal financing	$19.50	million	(29.5-10)
	c	Amount of external financing needed during coming year	$15.50	million	(35-19.5)